Middle class is okay

One sign of lackluster American education is that politicians who use the shrinking middle class prop get votes instead of laughs.

Post title from Carpe Diem: “Today’s new homes are 1,000 square feet larger than in 1973, and the living space per person has doubled over last 40 years”

Weathermen are smart enough to look out the window to make sure that what they see with their own two eyes matches with their models and instrument.

If you believe the shrinking middle class myth, I suggest spending more time looking out your window and paying attention. Not only have house sizes grown, but middle class homes also include many more amenities than even 15 years ago such a bathroom (or at least bathroom sink) for everyone, walk-in closets, jetted tubs, three car garages, finished basements and the new trend, outdoor living spaces, to name a few.

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Sports Craze & False Choice

Redistribution based on income inequality is a false choice. The reasoning goes something like this:

  • There are wealthy people and poor people.
  • Ignore why they are that way. Like many poor people are just kids starting out and many wealthy people have worked hard and saved their whole lives.
  • Poor people place a higher value on an extra dollar than a rich person who already has plenty.
  • Ignore that the behavior of rich people and poor people do not support this claim, otherwise poor people may be more interested in doing things that can earn and save them more dollars.
  • Therefore, we should redistribute more dollars from the wealthy to the poor.
  • Ignore the already high rate at which this is done.

Why do we only focus on wealthy people in our redistribution schemes?

In my opinion, things mustn’t be too bad if we can afford to support a host of marginal men’s and women’s sports programs from grade school through college, where most people who participate — especially at the higher levels — have few prospects for continuing in those sports after they get past those supported programs, except maybe to teach the next generation of youth to take advantage of those programs or to tell their glory day stories in the break room.

How many poor people could have been helped with the taxpayer money that has been put into all sorts of sports projects? Locally, we have taxpayer-funded pro sports stadiums and amateur sports facilities. Apparently playing soccer on grass is just too hard. Spending millions on fake grass fields for pre-teens to hone their soccer skills is the new norm.

Why don’t we look at more of such things and say if we really take external approaches to helping those in poverty seriously, why don’t we cut out all this other stuff?

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Does the majority overrule morality?

From Walter Williams column, Concealing Evil:

Some might argue that we are a democracy, in which the majority rules. But does a majority consensus make moral acts that would otherwise be deemed immoral?

Good question.

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Emergent Order in The Lego Movie

Mild spoiler alert.

I loved the Lego Movie. I was floored with its treatment of emergent order. At one point the hero encouraged fellow Lego people to try things, no matter how stupid it sounds, no matter how much others ridicule it, because you never know, it just may work.

Made me wonder if Russ Roberts, John Papola or Nassim Taleb consulted on the screenplay.

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Parasites, yep

From Charles Krauthammer’s column, Obamacare’s War on Jobs:

In the traditional opportunity society, government provides the tools — education, training and various incentives — to achieve the dignity of work and its promise of self-improvement and social mobility. In the new opportunity society, you are given the opportunity for idleness while living parasitically off everyone else.

Reagan had a similar radio address once. A vampire once demonstrated his wisdom by recognizing he was a parasite and it didn’t make much sense killing his host. And Lady Thatcher once pinpointed the problem with parasites that don’t realize they are parasites. They eventually kill the host and die (though she didn’t quite say it like that).

And from Dr. Sowell…

From this week’s Random Thoughts column:

Once, when I was teaching at an institution that bent over backward for foreign students, I was asked in class one day: “What is your policy toward foreign students?” My reply was: “To me, all students are the same. I treat them all the same and hold them all to the same standards.” The next semester there was an organized boycott of my classes by foreign students. When people get used to preferential treatment, equal treatment seems like discrimination.

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Speaking of the bottom 50% looking within…

…Walter Williams does just that in his latest column, Dependency, Not Poverty.

A snippet:

No one can blame a person if he starts out in life poor, because how one starts out is not his fault. If he stays poor, he is to blame because it is his fault. Avoiding long-term poverty is not rocket science. First, graduate from high school. Second, get married before you have children, and stay married. Third, work at any kind of job, even one that starts out paying the minimum wage. And finally, avoid engaging in criminal behavior.

Since President Lyndon Johnson declared war on poverty, the nation has spent about $18 trillion at the federal, state and local levels of government on programs justified by the “need” to deal with some aspect of poverty. In a column of mine in 1995, I pointed out that at that time, the nation had spent $5.4 trillion on the War on Poverty, and with that princely sum, “you could purchase every U.S. factory, all manufacturing equipment, and every office building. With what’s left over, one could buy every airline, trucking company and our commercial maritime fleet. If you’re still in the shopping mood, you could also buy every television, radio and power company, plus every retail and wholesale store in the entire nation” (http://tinyurl.com/kmhy6es). Today’s total of $18 trillion spent on poverty means you could purchase everything produced in our country each year and then some.

There’s very little guts in the political arena to address the basic causes of poverty. To do so risks being labeled as racist, sexist, uncaring and insensitive. That means today’s dependency is likely to become permanent.

 

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Why the bottom 50% should look within

Economist Tyler Cowen wrote a column in the New York Times, entitled Why Emerging Markets Should Look Within. Here’s a couple of key sentences:

While they [emerging market nations] have all been affected by global economic tides, these nations are facing crises because of problems in their national governance. And if we look elsewhere around the world, we find that governance has been re-emerging as a major factor behind success or failure in many emerging nations.

With all the discussion about income inequality, it made me think that the same could be said about the bottom 50% on the income scale.

It’s assumed that the bottom 50% are victims of larger economic forces that are beyond their control. It’s assumed those forces are holding them back and more government intervention is needed to level the playing field (while the magnitude and failures of past interventions are swept under the rug).

But, there’s very little discussion on what the bottom 50% can do about the things over which they have control.

Sure, there may be larger forces that hold some people back. One of the shocking lessons of adulthood is how much bureaucracy there is, even in market-driven enterprises, and how little merit counts. Also, attempts to shunt the bureaucracy often have the opposite effect.

But, I’ve also been shocked at how little we expect from people who we feel may be victims of such forces. Personal choices matter. Education, savings, responsibility, politeness and learning from your mistakes matter. Being able to overcome obstacles, being resourceful and having good character matter.

The most potent way to help the bottom 50% improve their lot may be to encourage them to focus more on what they can control, instead of waiting for solutions from the government. But, it seems to be in bad form to ask the bottom 50% to look within.

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Raise your hand if you’ve worked for less than minimum wage!

Don Boudreaux, of Cafe Hayek, made a very timely post for me: Other Unseen Consequences of Minimum Wage Legislation. One of his graduate students is beginning to study links between minimum wage and people working in illegal or illicit activities.

It’s timely because I’ve been working on a post covering this very topic. I’ve been struggling to edit it because it is complex — and I have more topics than just illegal activities.

One thing that annoys me about the minimum wage debate is how simple it is. It typically centers on only two factors: the minimum wage rate and unemployment. There are many more factors that don’t get much or any attention.

One factor is that even with a mandated minimum wage, people still work for less than minimum wage — legally and illegally, in legal activities and illegal activities.

I enjoyed Boudreaux’s post because it validated two things. One, that minimum wage may have one unintended benefit in pushing people to work in illegal activities. Two, that this topic doesn’t have much discussion. Boudreaux writes:

Darwyyn [his graduate student] is in the early stages of her research.  So far, the only significant and relevant study she’s uncovered is a very good October 1987 paper…

One study so far from 1987. Proof this is not much discussed.

And for me, this is only one part of many factors that don’t receive attention. As I mentioned above, I view this particular factor in three categories, people who work for less than minimum wage…:

1. Legally in legal activities

2. Illegally in legal activities

3. Illegally in illegal activities

Boudreaux’s graduate student’s focus is on #3. This factor was the target of my first attempts at a concise and emotionally attractive argument against the minimum wage in this post.

But there’s still two other categories in this one factor. Raise your hand if you ever worked for less than minimum wage in either of those two categories!

I have. While there are many more examples from my life, I’ll pick two.

I. Illegally in legal activities. When I was a kid, the local bike shop owner offered me an off-the-books job. He’d pay me $4 cash for every bike I assembled out of the box for his showroom. He also gave me a generous discount to things I bought at his shop and gave me access to tools to help me maintain my bike.

This made sense for him. This freed up his experienced mechanics to work on higher margin repair and maintenance work for customers, while giving me the easier job of assembling bikes.

I wasn’t efficient at assembling bikes to start with, so I rarely cleared the minimum wage. As I became more efficient, I could clear the minimum wage. This is a good example of something a lot of people have a hard time understanding, what low-skilled workers are worth. For the bike shop owner, my worth wasn’t measured in hours worked, it was worked in the number of bikes I could produce for him to sell.

And, as my productivity improved, so did my wage rate. I may not have had a chance to improve my productivity if the bike shop owner followed the law and paid me more than I was worth to begin with.

Assembling bikes isn’t illegal. But, I believe I was probably too young to work, I got paid in cash (so no records, no taxes) and often made less than minimum wage, which I think made my employ illegal.

II. Legally in legal activities. As an adult, I volunteer to organize and coach a youth sports team. This is no small task. It takes quite a bit of time and effort and there are plenty of people who do it for pay.

However, I do receive benefits. I get to do something with my kid (he’s on the team). I enjoy the sport and, as I’ve come to know the other kids on the team, it’s rewarding for me to see their knowledge, skills, teamwork and sportsmanship develop.

I’ve also learned quite a bit about a sport I knew nothing about when I started and about coaching, leadership and delegation. I also find it to be a thought-provoking exercise. The key task of a coach is prioritize the 10 things that you need to work on down to 1 or 2 so the team can make the most progress in the next game. More on that in another post.

Those benefits to me are worth well more than a wage I could have earned. Nobody will say I shouldn’t do this because I don’t make minimum wage, even if I was poor. There are plenty of poorer coaches that do exactly what I do.

And, it’s not a matter of resources. For me to make the minimum wage would cost each set of parents about the price of a latte each week.

But, since I’m doing this for individuals — the parents and the kids — nobody really thinks about the minimum wage. If was doing it for some faceless “business”, they might.